How do federal elections really impact the property market?
The upcoming federal election may have little impact on the property market, potentially creating more favourable conditions for investors looking to buy or sell their property, new industry research suggests.
A recent Domain report analysed data from the past seven federal elections to reveal that neither major political party holds a clear advantage in impacting property market growth.
Under Liberal terms, house prices grew by 3.1 per cent, outpacing Labor’s 2.1 per cent, while Labor saw stronger unit price growth at 4.1 per cent, compared to just 1.4 per cent under the Liberals.
First home buyers also appeared to be more active in Labor terms, comprising 34.4 per cent of owner-occupier loans compared to 30.5 per cent within Liberal’s terms.
Even with each government’s differing growth conditions, Domain’s chief of research and economics, Dr Nicola Powell, said neither major party has a clear edge in driving a stronger property market.
“The idea that a political party’s victory automatically leads to a stronger property market and improved home ownership rates is an oversimplification,” Powell said.
“While elections can affect policy and sentiment, the reality is far more complex than our long-held beliefs suggest,” she added.
The report also investigated the effect of federal elections on the property market and surmised that these impacts may not be as significant as commonly thought.
Contrary to popular belief, Domain’s findings showed that auctions held on election day can actually achieve higher clearance rates from more committed buyer participation.
Data showed that auctions on election day recorded an average clearance rate of 60.4 per cent, compared to 59.5 per cent the previous Saturday and 59.8 per cent the following Saturday.
Powell said the slightly higher clearance rate can be attributed to the smaller auction pool and more committed buyer base attending auctions on election day, which investors can benefit from whether they are looking to buy or sell their property.
She said that election day may present investors with a “unique opportunity”.
The report instead suggested that the biggest cause of the dramatic drop in scheduled auction volumes on election day may be sellers’ popular conception that potential buyers are all occupied.
While these results indicated that election months don’t directly influence the volume of property transactions, Powell said that broader political uncertainty can dampen market activity.
“Political uncertainty can arise at any time during or outside elections,” Powell said.
“During these periods, buyers often postpone major financial commitments until confidence is restored,” she explained.
Similarly, Domain’s statistical modelling linked a one-point increase in Australia’s Policy Uncertainty Index to an approximate decline of 8.08 property sales.
The report also noted that the index rose to 261.6 in February of this year, marking a two-year high and more than 100 points above the 2023 and 2024 averages of 138.8 and 125.2, respectively.
Due to the surge in uncertainty, the model indicated that property sales would have been over 800 higher if the index had stayed at its previous levels.
Powell said the report’s findings ultimately indicate that the property market is significantly shaped by various socioeconomic factors extending far beyond the federal election and political events.
“While federal elections can indirectly influence housing policies and market sentiment, they represent only one piece of a much larger economic puzzle,” Powell said.